Shale gas is natural gas trapped deep underground in sedimentary rocks. It can be extracted using a process known as hydraulic fracturing – "fracking" – which involves pumping huge quantities of water, sand and chemicals into the rocks at high pressure. This opens up fissures in the shale, which are held open by the sand, enabling the trapped gas to escape. Advocates argue that exploiting the world's vast shale gas deposits will help keep energy affordable and cut consumption of dirtier coal. But sceptics claim that fracking is dangerous and polluting, and that increasing natural gas supplies will boost rather than reduce planet-warming carbon emissions. The debate has become increasingly heated and high-profile in the last few years.

Shale gas was formed hundreds of millions of years ago from decomposing plants trapped by clay and silt. A small amount of easily accessible gas was extracted in the 19th century but it wasn't until the 1970s that shale-gas extraction technology started to develop in earnest, supported by US government R&D funding. Breakthroughs in drilling techniques allowed long wells to be drilled horizontally through shale layers more than a kilometre below the surface. This, combined with developments in hydraulic fracturing technology, opened the door to large-scale extraction.

After a slow start, American shale gas production started soaring in around 2005, leading to growing interest in the energy source around the world. By 2011, fracking experiments were underway in UK (near Blackpool), China, Poland and elsewhere, and estimates of global shale-gas reserves were rising fast, with the outgoing head of Shell claiming that there could be enough to power the world for 200 years.

However, both reports were more sympathetic to some of the other concerns raised by anti-fracking campaigners, such as the quantity of chemicals used in shale gas extraction (many of which are only just starting to be disclosed in the US), the huge amounts of water required to operate the wells, and the amount of wastewater generated.

Whatever the size of the reserves, actual rates of extraction in each region will depend on economics and politics as well as technology. The US government expects shale gas to account for 46% of its natural gas extraction by 2035 and according to BP shale gas – along with tar sands and other unconventional fuels – will make the Americas largely self-sufficient in energy by 2030. By contrast, a Deutsche Bank report looking at the potential for shale in Europe concluded that, due partly to higher population density and stronger environmental regulation, "those waiting for a shale gas 'revolution' outside the US will likely be disappointed, in terms of both price and the speed at which high-volume production can be achieved." Much will depend how the debate about environmental impacts and regulation plays out in coming years. Fossil fuel prices will be another factor, as higher prices will make fracking more economical.

The other key debate about shale gas is its potential impact on climate change. Creating heat or electricity by burning natural gas produces less CO2 (and other pollutants) than using coal or oil. On this grounds, the gas industry and some commentators say that shale gas is good news for the climate, as it could limit coal consumption while renewables and nuclear are scaling up. Indeed, insiders say the US government's plan for reducing carbon emissions relies heavily on switching from coal to gas.

However, some studies have suggested that shale gas may be no better than coal, due to large-scale leaks of the powerful greenhouse gas methane at fracking sites. The Select Committe enquiry claimed these so-called fugitive emissions could be avoided with better site management. But even if this turns out to be true, there's no guarantee that extra gas supplies will reduce global coal use. As a recent Tyndall Centre report concluded, without a global carbon cap, additional gas resources may simply add to overall fossil fuel use, driving emissions even higher and making climate change ever harder to solve.